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IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR
Vivek Rusia, Pradeep Mittal, JJ.
The State Of M.P. & Ors – Petitioners
Versus
Din Dayal Agrawal – Respondents
Civil Revision No. 259 of 2002
Decided On : 11-03-2026
(1) Madhyastham Adhikaran Adhiniyam, 1983 (M. P.) -- Ss. 7 and 7-B -- computation of limitation -- period of limitation for filing case before arbitrator has to be computed from the date when cause of action arose, not from termination of contract -- cause of action arose when, after termination of contract, Executive Engineer could not finalize bill for payment within three months as per condition of agreement -- Tribunal rightly held that claim is within limitation -- finding recorded by Tribunal is based on appreciation of facts and contractual provisions -- defendant/petitioner has not been able to demonstrate that Tribunal committed any legal error in entertaining claim or in computing period from date of demand. [Paras 14 & 15
(2) Madhyastham Adhikaran Adhiniyam, 1983 (M. P.) -- S. 7 -- refund of earnest money and security deposit -- defendant/petitioner pleaded that plaintiff/respondent failed to complete work allotted to him as per specifications so he is not entitled to refund of earnest money and security deposit -- defendant/petitioner has not made any counter-claim for balance work carried out by another agency, or any extra amount or extra expenditure incurred by department in getting work done by another agency -- no notice given to respondent/plaintiff for forfeiture of earnest money -- Tribunal rightly held that respondent is entitled to get refund. [Paras 16 & 17
(3) Madhyastham Adhikaran Adhiniyam, 1983 (M. P.) -- S. 7 -- payment of withheld amount -- work already measured and recorded by Sub-Engineer and checked by Assistant Engineer -- rejection of masonry work subsequently done merely on visual inspection without conducting any test -- communication of rejection of work issued after about two years -- Tribunal concluded that defendant/petitioner was not justified in withholding the amount and directed its payment -- finding based on evidence on record -- cannot be said to be arbitrary or illegal. [Para 21
(4) Madhyastham Adhikaran Adhiniyam, 1983 (M. P.) -- S. 7 -- claim for ante-lite interest on wrongly withheld amount -- agreement silent regarding interest on delayed payment -- Tribunal awarded interest after considering that agreement did not contain any clause prohibiting payment of interest on delayed payments -- Tribunal granted interest at the rate of 12% from date of demand till realization -- such award of interest falls within jurisdiction of Tribunal and does not disclose any legal infirmity. [Paras 22 & 23
¼1½ ek/;LFke~ vf/kdj.k vf/kfu;e] 1983 ¼e-iz-½ & /kkjk 7 rFkk 7-[k ifjlhek dh lax.kuk & e/;LFk ds le{k çdj.k çLrqr djus ds fy, ifjlhek dh vof/k dh lax.kuk ml fnukad ls dh tkuk gksrh gS tc okn gsrqd mn~Hkwr gqvk] lafonk dh lekfIr ls ugha & okn gsrqd rc mn~Hkwr gqvk tc] lafonk lekIr gksus i'pkr~ dk;Zikyd ;a=h djkj dh 'krZ ds vuqlkj rhu ekl ds Hkhrj lank; ds fy, fcy ds laca/k esa vafre fu.kZ; ugha ys ldk & vf/kdj.k us Bhd gh vfHkfu/kkZfjr fd;k fd nkok ifjlhek ds Hkhrj gS & vf/kdj.k }kjk vfHkfyf[kr fu"d"kZ rF;ksa vkSj lafonkRed mica/kksa ds foospu ij vk/kkfjr gS & çfroknh@;kph ;g çnf'kZr ugha dj ldk gS fd vf/kdj.k us nkok xzg.k djus esa vFkok ek¡x fd, tkus ds fnukad ls vof/k dh lax.kuk djus esa dksbZ fof/kd xyrh dh gSA ¼iSjk 14 ,oa 15
¼2½ ek/;LFke~ vf/kdj.k vf/kfu;e] 1983 ¼e-iz-½ & /kkjk 7 & vfxze èku vkSj lqj{kk fu{ksi dk çfrnk; & çfroknh@;kph us vfHkokd~ fd;k fd oknh@çR;FkhZ mls vkcafVr fd;k x;k dk;Z fofunsZ'kksa ds vuqlkj iw.kZ djus esa vlQy jgk blfy, og vfxze /ku vkSj lqj{kk fu{ksi ds çfrnk; dk gdnkj ugha & çfroknh@;kph us fdlh vU; vfHkdj.k }kjk fd, x, 'ks"k dk;Z] vFkok fdlh vfrfjä jde ;k fdlh vU; vfHkdj.k ls dk;Z djokus ds fy, foHkkx }kjk mixr vfrfjä O;; ds fy, dksbZ çfrnkok ugha fd;k gS & vfxze /ku ds leigj.k ds fy, çR;FkhZ@oknh dks dksbZ lwpuki= ugha fn;k x;k & vf/kdj.k us Bhd gh vfHkfu/kkZfjr fd;k fd çR;FkhZ çfrnk; dk gdnkj gSA ¼iSjk 16 ,oa 17
¼3½ ek/;LFke~ vf/kdj.k vf/kfu;e] 1983 ¼e-iz-½ & /kkjk 7 & jksdh xbZ jde dk lank; & mi;a=h }kjk dk;Z igys gh ukik vkSj vfHkfy[kr fd;k tk pqdk rFkk lgk;d ;a=h }kjk feyku fd;k tk pqdk & rRi'pkr~ dksbZ ijh{k.k fd, fcuk] –'; fujh{k.k ek= ij fpukbZ dk dk;Z vLohdkj fd;k x;k & dk;Z vLohdkj fd, tkus dh lalwpuk yxHkx nks o"kZ i'pkr~ tkjh dh xbZ & vf/kdj.k us fu"d"kZ fudkyk fd çfroknh@;kph }kjk jde jksdk tkuk U;k;ksfpr ugha Fkk- rFkk mlds lank; dk funs'k fn;k & fu"d"kZ vfHkys[kxr lk{; ij vk/kkfjr & euekuk ;k voS/k ugha dgk tk ldrkA ¼iSjk 21
¼4½ ek/;LFke~ vf/kdj.k vf/kfu;e] 1983 ¼e-iz-½ & /kkjk 7 & xyr jksdh xbZ jde ij okniwoZ C;kt ds fy, nkok & foyafcr lank; ij C;kt ds lacaèk esa djkj ekSu & vf/kdj.k us bl ij fopkj djus ds mijkar C;kt vf/kfu.khZr fd;k fd djkj esa foyafcr lank; ij C;kt dk lank; çfrf"k) djus dk dksbZ [kaM varfoZ"V ugha & vf/kdj.k us ek¡x fd, tkus ds fnukad ls olwyh rd 12% dh nj ls C;kt vf/kfu.khZr fd;k & bl çdkj C;kt vf/kfu.khZr djuk vf/kdj.k dh vfèkdkfjrk esa vkrk gS rFkk blls dksbZ fof/kd 'kSfFkY; çdV ugha gksrkA ¼iSjk 22 ,oa 23
| Table of Content |
|---|
| 1. overview of contract formation, performance failure, and initial arbitration filing. (Para 1 , 2 , 3) |
| 2. petitioner's contentions regarding contract termination and withholding of payments. (Para 4 , 5 , 6 , 7) |
| 3. interpretation of contractual clauses concerning notice periods and termination procedures. (Para 8 , 9 , 10 , 11 , 12 , 13) |
| 4. limitation period begins when the duty to finalize payment fails. (Para 14 , 15) |
| 5. requirement to prove losses or formally forfeit deposits to justify withholding. (Para 16 , 17) |
| 6. rejection of masonry work requires technical verification beyond mere visual inspection. (Para 18 , 20 , 21) |
| 7. jurisdiction to award interest on delayed payments in the absence of prohibitory clauses. (Para 22 , 23 , 24) |
| 8. final judicial order dismissing the revision petition. (Para 25) |
ORDER :
Pradeep Mittal, J.
The present revision has been filed under Section 19 of the M.P. Madhyastham Adhikaran Adhiniyam, 1983 against the award dated 31.10.2001 passed by the Madhya Pradesh Arbitration Tribunal, Bhopal in Reference Case No. 3/2000 (for the sake of brevity, the defendant shall hereinafter be referred to as the ‘petitioner’ and the plaintiff as the ‘respondent’), whereby the Tribunal partly allowed the reference in favour of the respondent/plaintiff.
2. The defendant/petitioner had invited tenders for construction of a Primary Health Centre building along with G-Type and H-Type quarters and a garage at Bordehi, including water supply and sanitary fittings under the P.W.D. Betul Division. The respondent’s tender at 12.80% above C.S.R. was accepted on 31.01.1995, and a work order was issued on 03.07.1995 with a stipulated completion period of 10 months. During inspection, the Executive Engineer found that the bricks used in the masonry work were of poor quality and not as per the specifications, and therefore the masonry work was rejected and the contractor was directed to redo the work. The respondent was repeatedly instructed to rectify the defects and to expedite the work, but the progress remained unsatisfactory. Subsequently, the department issued several show-cause notices under the terms of the contract. As the respondent neither improved the progress nor complied with the instructions, the contract was terminated on 20.02.1998. Thereafter, a fresh tender was issued for completion of the remaining work and the balance work was awarded to another contractor.
3. The plaintiff/respondent thereafter filed a petition before the Madhya Pradesh Arbitration Tribunal under Section 7 of the Adhiniyam claiming Rs. 1,99,715 under various heads including refund of earnest money and security deposit, payment of the final bill, interest, and compensation for delay and breach of contract. The petitioner contested the claim contending that the work executed by the respondent was not in accordance with the specifications and that the first running bill had already been reduced due to rejection of defective brick masonry work, which the respondent had accepted without protest.
4. Learned counsel for the defendant/petitioner submitted that the Madhya Pradesh Arbitration Tribunal committed an error in law in awarding a sum of Rs.68,018/- in favour of the respondent along with interest from the date of presentation of the claim petition till payment. It was contended that the Tribunal itself recorded findings that the plaintiff /respondent was responsible for not taking the layout in time and for the delay in execution of the work, yet relief was wrongly granted in favour of the respondent /plaintiff.
5. It was further submitted that the Tribunal erred in holding that the termination of the contract by the defendant/petitioner was invalid on the grounds that it was done within less than 30 days. Learned counsel submitted that several show cause notices had been issued to the respondent /plaintiff dated 25.06.1997, 16.10.1997 and 24.01.1998, which clearly show that sufficient opportunity was granted to the respondent /
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